GM Probably (Finally) Heading To Bankruptcy

After skillfully managing the bailout of GM and throwing billions of dollars in taxpayer money at it, our man Timmy (Geithner) has told GM to prepare for bankruptcy:

General Motors Corp. is believed to be preparing to file for bankruptcy by June 1 after being directed to plan for a filing by the U.S. Treasury Department, according to a report Sunday in the New York Times.

The Times, quoting unidentified sources, said the Treasury Department has directed officials at General Motors to lay the groundwork for a “surgical” bankruptcy filing that could last as short as a few weeks for portions of the company. Those portions would be the “good” parts of the company, and the “less desirable” parts of the company would remain in court for much longer and possibly be liquidated, according to the Times.

One has to wonder who gets to determine what the “good” parts are, but that said, if the following is true, it won’t be GM’s present “health care obligations”.

The parts of GM that may get bogged down in a lengthy court restructuring or liquidation include the “unwanted brands, factories and health care obligations,” sources said in the report.

That should fire up the UAW. The union won’t be the only one who isn’t going to be happy with an attempt to rush through a GM bankruptcy.

A report in the Wall Street Journal on Sunday said that any attempt at a “quick” bankruptcy for GM could face legal challenges from bondholders of the company.

As they have every right to do — but it certainly isn’t going to make the bankruptcy either surgical or short. My guess is the bondholders are realizing that pirates aren’t only to be found off the coast of Somalia.

We (The people) are backing the GM warranties, why not their health and pension plans?
Not really a very large step – one way or another, he’s made ‘us’ liable by fiat, so I don’t see his extending that to union benefits as a reach (and won’t be surprised when he does it).

GM should have filed last year. Then if the feds wanted to get involved, the taxpayers could have provided DIP financing. This would have been much cheaper and by now GM would either have been reorganized or begun liquidation. All the feds are doing is just dragging out the pain.

I am waiting for this happen. When it does, The Clown™ is liable to go on television and tell everyone that he inherited this mess. Somehow, however, no one will ask him, “What have you done to solve it?” That is because no one questions The Clown™.

Since most of the UAW has 20+ years (even 30+ years), they will get most of their pension and probably a good deal of their healthcare through Pension Benefit Guarantee Corporation. And considering the state of the PBGC, that will likely mean the taxpayers.

They only way to avoid that would be to not include it in the bankruptcy or avoid bankruptcy altogether.

There may be some pain for the medical expenses for those that retire early. But that’s about it.